Tuesday, November 25, 2008

Excessive Avarice

As the late great Senator Everett Dirksen (R-IL) so famously observed, “A billion here, a billion there, and pretty soon you’re talking real money.” Well there sure is a lot of real taxpayer money being thrown around these days in an effort to stop the U.S. economy from crashing. I haven’t had the courage to tell my 12 year-old daughter that her share of the national deficit is already $20,000 and it will likely double very soon.

Yes, Congress must pass a stimulus package to “jump start” the U.S. economy. Yes, Uncle Sam must inject another $25 billion into Citibank and back $306 billion of its residential and commercial real estate loans. Yes, other banks will need help too. Yes, the U.S. had to pump $154 billion into AIG. It could not let Fannie Mae and Freddie Mac fail. And it is likely to give the U.S. automakers a bailout when they present Congress revised business plans.

It is going to take more than a $750 billion TARP (Troubled Assets Relief Program) for the newly established “Office of Financial Stability” to right the ship. Members of the Bush and incoming Obama administrations are working feverishly to set the economy on the road to recovery. This task is made more complicated because of the complexity of many of these failed transactions and by the fact that we live in a global economy. Alarmingly, we still don’t know the full extent of the financial exposure. We do know, regretfully, that hundreds of thousands of Americans are losing their jobs; that tens of thousands of citizens are losing their homes; and that thousands upon thousands of seniors are spending the last few dollars of their life's savings.

I visited a neighborhood store that is usually packed during the holiday season. Not so today. “No one is spending money,” said my friend the owner, “I am dying.” My neighborhood is one of the wealthiest in the country yet several of its stores have closed in just the past few weeks. All anyone talks about is the economy (although talk of a possible “Jet-Giant” Superbowl represents a welcome diversion). Soberly President-elect Obama says, “it’s going to get worse before it gets better.” And a Russian political analyst is predicting the United States will “collapse and break apart.”

American has overcome great difficulties in its history and emerged stronger than ever. The Civil War, The Depression and World War II are examples of its unmatched spirit, resilience, ingenuity and tenacity. I am confident that my daughter’s children will be born into the greatest nation in the history of the world.

But let us not lose sight of the fact that excessive avarice is largely responsible for the nightmare we are living through today. Our democratic capitalist system makes it possible for just about anyone to become wealthy. On the other hand, it permitted a few greedy corporate executives to exploit the system for enormous personal gain by setting up a Ponzi scheme involving risky real estate loans and complicated securities. The regulations were few, checks and balances were minimized, controls were scant, CEO appointed boards co-conspired, and salaries, bonuses and fees were outrageously high.

Here is one thing I, a U.S. taxpayer, am going to insist on: go after the people who profited while bringing this country to its knees. Citibank’s former CEO, Charles O. Prince, made tens of millions of dollars along with the head of its trading division, Thomas Maheras, its senior “risk” officer, David C. Bushnell, and many other top executives, all based on the bank’s surging performance. But many of these deals were unreasonably risky and they have nearly bankrupted the institution. Take Stanley O’Neal, formerly CEO of Merrill Lynch. His golden parachute, the one he got for destroying his company, is in excess of $160 million dollars. The board stacked with O’Neal loyalists approved the package. These are just a few names of executives who have gotten rich and gotten the hell out of town.

Here’s a proposal. Until recently the national debt was nearly $6 trillion and it is likely to more than double during America’s economic recovery. So the increase is about 50% of the new total. The IRS should take back 50% of Stan O’Neal’s golden parachute, or $80 million, and re-allocate it to the TARP. My name for this program is the “Excessive Avarice & Total Incompetence Tax.” That’s "EAT IT" for short. A million here and a million there and pretty soon we're talking real money.

Friday, November 21, 2008

Senator Clinton Again

At long last it appears that Senator Hillary Clinton will be President-elect Barack Obama's Secretary of State. The announcement will apparently be made after Thanksgiving, along with the names of the rest of Obama's national security team.

So now it falls to New York Governor David Paterson to appoint a replacement. And, of course, a lot of lobbying is going on behind the scenes for this plum assignment. The governor has taken his own name out of the running, but the state's aggressive attorney general, Andrew Cuomo, is a strong candidate.

Governor Paterson, if you haven't done so already, give William Jefferson Clinton a call and see if he's interested. It is not unprecedented. Two former presidents have served in the U.S. Congress in the past. Former President John Quincy Adams spent 17 years in the U.S. House of Representatives and President Andrew Johnson served as a U.S. Senator.

President Clinton is one of the most powerful and admired politicians in the United States. His presidency was largely very successful; the country prospered and during his two terms America was widely respected around the world.

With the U.S. economy in the tank and our troops fighting two wars, there is plenty of work to be done. Clinton is exceptionally knowledgeable on most issues, passionate and he has unmatched experience, including as a state governor. And he will have more time because, with Hillary's appointment as secretary of state, Bill will have to curtail his outside speaking and fund-raising. And the Clinton's can buy a second home in Foggy Bottom, just a short hop from Reagan Airport and the New York shuttle.

Yes, Bill is a bit of a maverick and he likes to speak his mind. But he may be more constrained as a senator than as a private citizen. And senators are independent operators, so he will have plenty of flexibility. Can you imagine both Senator Chuck Schumer and Senator Bill Clinton serving the same state in the same chamber? My hunch is Clinton would try not to do anything that undermines or embarrasses his wife in the world's greatest deliberative body (like South Carolina), nor with the other end of Pennsylvania Avenue. Yet he would be a powerful force and voice to assist in positive change for America.

The Clinton Senate seat is up again in two years. If Bill Clinton does not like the job he can always step aside. But this is "an all hands on deck" time in our nation's history, to quote Obama. This country needs all the heavy-hitters it can muster on the front lines fully engaged. The country needs ideas, innovation, imagination and people who can deal with the complicated and challenging issues facing America today.

President-elect Barack Obama is confident, intelligent and secure enough to handle strong-willed people. Bill Clinton is a smart, savvy and superbly experienced leader. And America needs all the help it can get.

Tuesday, November 18, 2008


Two weeks ago Senator Barack Obama was elected to our nation’s highest office by a large margin. This coming January 20 a record breaking four million people are forecast to attend his inauguration at the U.S. Capitol. This is especially amazing since Barack Obama is responsible for the recession? Aghast, didn’t you hear!

“The Obama recession is in full swing,” radio right-winger and spitball zinger Rush Limbaugh has declared. “This Obama recession might turn into a depression,” he warned, “and his ideas are killing the economy.” Limbaugh’s charge is based on Obama’s pledge to raise income taxes for people making more than $250,000 a year and that he may increase capital gains rates for the wealthy.

Do I hear an echo? Oh, yes, it’s Sean Hannity. “Wall Street keeps sinking, could it be the Obama recession?” asks Hannity. This is now a major topic on his television show and throughout the right-wing radio talk world as well. Hey, Sean, can’t you find a way to pin this on Bill Ayers and the Reverend Wright too? Like it’s a radical left-wing cabal headed up by Hussein Obama. If I am not mistaken, your fear is that America doesn’t know who the real Barack Hussein Obama is?

Well, in case you haven’t seen it, the United States is already in a “prolonged” recession. The National Association for Business Economics, NABE, just released a survey of leading economists and the findings are depressing.

Most economists surveyed believe that the U.S. recession began on or about the beginning of 2008, well before Obama’s first primary win. During the third quarter of this year they estimate that GDP (Gross Domestic Product) contracted by .3%, and it will fall an amazing 2.6% in this, the fourth quarter. A recession is two consecutive quarters of negative GDP. Nearly three-fourths of those surveyed believe that economy will grow a paltry .7% next year, starting off with a 1.3% decline in the first quarter and slowly improving.

However, unemployment is forecast to hit 7.5% by the end of next year, and given the recent surge in layoffs that number will probably be quickly revised upward. The unemployment rate is currently at 6.5%.

If this forecast is not bad enough, consider we are in a global meltdown and that most economists don’t know how the current financial crisis will play out. Banks and financial institutions are uncertain about their future, foreclosures are at a record high, and our great economic engine, the U.S. auto industry, may soon be out of business.

The U.S. government bailout is not working because it was not well thought out. But it is adding to America’s national debt, which is now approaching $11 trillion. That’s double what it was in 2000 when President George Bush was sworn into office as a compassionate conservative. During his tenure President Bush has added more than $15,000 in debt for each and every American, and the total debt is growing at a rate of $3.90 billion a day!

Meanwhile, we are mired in two costly wars, both in dollars and precious lives. And we urgently need to fix health care, education, entitlements, the environment, infrastructure and the list goes on. Furthermore, China and Japan are among the nations that own a large chunk of America and we are asking for more foreign investment. Thankfully, the George W. Bush administration will leave office in just a few weeks.

But Limbaugh and Hannity will go on and on. Each of them is free to shout and scream any outrageous, idiotic and inane comment they want in our great country. They daily manifest deceitfulness, divisiveness and greed. Clearly they are not encumbered by responsibility, integrity and decency. But each, with their $100 million plus employment contracts, are sure not feeling any economic pain from the Obama-cession.

Friday, November 14, 2008

Ones and Zeros

The television station business is terrible and, given today’s uncertain economy, the future is ominous.

For decades local stations were cash cows providing owners with huge profit margins. News operations represent the biggest budget item at most stations in large part because of the growth of local news programming in most markets in the 80's and 90's. Not so anymore. The television audience has been dispersing over an array of alternative choices. One result is that local sales revenues have been declining and, for some time now, stations have been aggressively cutting costs. All the least painful and disruptive cuts were made long ago. Stations must find a new way to do business.

News production is labor and capital intensive, and even amortizing costs over additional news programs is problematic in the current sales environment. Stations have already been through several rounds of cost cuts. The result, putting aside the star personalities, graphics and a few special features, is that local newscasts are pretty much similar.

The Fox and NBC owned local station groups have announced they are beginning a local news service that will make it possible to share video and reduce costs. The service will officially start in Philadelphia early next year at WTXF (Fox) and WCAU (CBS), where these stations have been conducting a "proof of concept" since last summer. Subsequently the service will roll out to major cities where each network has an English language television station. The video will also be available to other local media organizations in each market.

John Wallace, president of NBC Local Media and an industry innovator, said, “By pooling resources to provide video coverage of general market events, we can ensure our stations are covering the news of the day, and at the same time, focus our efforts on the type of specialized reporting that defines our brands and differentiates our stations within their communities.” So some of the cost savings from newsgathering will be reinvested in enterprise stories, franchise pieces and special series that are unique. But headcount, capital and facility expenses will be reduced.

When I was a senior executive at CBS News twenty years ago, before the Berlin Wall had fallen, Tiananmen Square and the Internet boom, I met with one of my counterparts at a competitor who proffered this proposal: “let’s share news content.” He said, “News is a commodity, we are each spending too much money and it all looks the same.” He even provided a scenario, “You cover the front door of the Kremlin and we will cover the back door, that way we each don’t have to have two crews there.”

At the time The CBS Evening News was number one in the national ratings. This was no accident. We were very competitive in the field, fighting for every exclusive story, interview or picture. CBS News also offered an abundance of outstanding original reporting from its powerful team of correspondents. CBS News produced success.

Back then, complicated operational and anti-trust problems helped nix the proposal. More importantly, such a move would have sapped our competitive edge and distinctiveness, it would have discouraged original reporting, it would have accelerated homogeneity among the evening newscasts, it would have discouraged our journalists, it would have been disruptive and it would have resulted in a dramatic reduction of our resources.

Now, two decades later, a technological explosion has altered media landscape into hundreds of channels, satellites, Internet sites and mobile phone service providers. Get any content, anywhere, anytime. Content is acquired and repackaged from multiple sources, including embedded content, "user" supplied video and EPK's. Correspondents are more likely to be “packagers” who don’t even have to leave the studio. More and more they rely on the same news wires for information. But packaging is not original reporting. Loudly offering an opinion is not experienced analysis. Wikipedia and Google searches do not replace thorough research.

Original reporting, including investigative pieces, quality story telling and thoughtful analysis, helps a news organization build a bond with its audience on each of its platforms. It is how a responsible news organization serves the public. It is how our Democracy thrives and remains strong particularly in a crisis such as 9/11 or the collapsing economy.

These elements are at the heart of journalism and make up the identity and character of a news organization. Without them, to paraphrase the great Edward R. Murrow, it is nothing but ones and zeros in a box.

Monday, November 10, 2008

Dead Donkey

Sal sells his donkey to Sam for $100.

A couple days later the donkey dies.

The Sam goes to the Sal and says, "that donkey you sold me died. I want my $100 back."

The Sal says, "I already spent the money."

The Sam says, "Okay, I'll keep the donkey, don't worry about it."

A few months later the two cross paths.

"What did you ever do with that dead donkey?" Sal asked.

Sam responded, "I sold it and made a big profit."

"How did you do that?" asked Sal.

"Well," said Sam, "I raffled it off at $2 a ticket and I sold 100 tickets."

Stunned Sal asked, "But the donkey was dead!"

Sam smiled, "Yeah, but I only had to tell that to one person."

Saturday, November 8, 2008

Broadcast News Blues

The 2008 presidential election made history as for the first time America elected an African American to be president. It also made history as a cable news organization drew more viewers election night than any of its long established broadcast news competitors.

Nearly 80 million viewers tuned in to television election night, about 20 million more than election night 2004. In "extended coverage," from 8:00pm to 12:30am, CNN had 13.3 million viewers, about eighty thousand more than second place finisher ABC News, and about a million more viewers than NBC News. In fact, CNN nearly doubled CBS News in viewers. The three broadcast networks combined drew nearly 32 million viewers, just 4 million more that the top three cable news networks.

Because of their entertainment programming commitments, the broadcast networks provide much less news each day, and only interrupt regular programming for major breaking news. News viewers have been increasingly reliant on cable news as their first choice for news any time of day. Consequently, brand loyalties are shifting from the established broadcast news networks to cable news outlets.

The resurgence of CNN, the emergence of the Fox News Channel and the recent growth of MSNBC, have all increased viewer awareness and sampling for these cable outlets. The 2008 elections have, so to speak, lifted all cable news boats, giving CNN a big boost while conservative news junkies flocked to Fox and liberals turned to MSNBC. The Fox News Channel and CNN each drew the largest audience for one of the three presidential debates. No doubt post election news viewing will recede, but combined cable news audiences are certain to settle in at a new higher level.

Ted Turner's old mantra was that the "news is the star." No more. Today cable news is driven largely by brash personalities unabashedly expressing their views and opinions. Of course, there are exceptions. Nonetheless, many cable news anchors are viewed as super stars and mentioned on a par with their broadcast news counterparts.

Cable news organizations derive revenues from commercials and "sub fees," a dual stream, so even a couple million viewers are lucrative. While the evening newscasts each typically draw six to eight million viewers, they only get revenues from one source of revenue, commercials. Advertising rates have decreased because there is so much news programming and inventory available for the audience. Also news audiences are made up of older viewers, which are less desirable for advertisers to reach. Finally, given the economic climate, companies are sharply reducing their advertising budgets. Cost pressures are likely to fall disproportionately hard on broadcasters.

Morning news programs are lucrative. NBC's Today Show makes an enormous amount of money which helps to underwrite general news division costs. ABC's Good Morning America and CBS's Early Show each are very profitable, but to a lesser extent. Morning television has been the only time period to show viewer growth. Nonetheless, the advertising contraction will impact even these programs, and the cable news networks are aggressively going after market share in the morning.

Viewership of the evening newscasts on the broadcast networks continues to decline. NBC has the benefit of both a broadcast and a cable news network, MSNBC. They have worked aggressively to integrate operations to be more efficient and effective and have focused a lot on the Internet. The ABC and CBS news divisions do not have a cable news operation to share costs with so they are in a much more difficult position. And their Internet efforts have not been very profitable so far.

Next year a new president will be sworn in and he has pledged to take us in a new direction. Change is coming. But today, broadcast news organizations are already re-examining their strategy, vision and business models. Change is coming.

Wednesday, November 5, 2008

Only in America

The results of America’s presidential election are being acclaimed and celebrated around the world. Only in America is such a story possible.

The world’s greatest democracy has decided to change course at a time when it is sinking into a recession and engaged in two difficult wars. And it has selected as its president a relative newcomer with a most unusual name: Barack Hussein Obama. As a consequence, it has also addressed its single greatest failing in American history: slavery and its painful legacy. While not erasing this great scar, this election brings to a close a most important chapter in the struggle for equal rights.

Yesterday America resolutely declared its intentions for its future. Domestically it will address its economic problems through investment and innovation, it will ease the burden on middle class families by offering tax breaks, better health care and a quality education. America will work to end the Iraq war responsibly, go after Bin Laden wherever he may be, and it will work to elevate America’s standing in the world. The election of Obama has already re-opened many doors overseas.

In the afterglow of this election, hope, optimism and pride shine brightly throughout this land. There is little doubt that President-elect Obama is ready to lead the country. His election campaign was a masterful display of managerial, strategic and operational skills. Obama’s experience as a community organizer in Chicago gave him a major advantage as he linked a vast social network together around his proposals using twenty-first century technology. His supporters were immensely devoted to him, and they delivered record campaign donations and votes.

At this moment Obama has a righteous wind at his back. But expectations are already unrealistically soaring, both here and abroad. This election is not the end of our problems it is only the beginning of a long steep road. And impatience, instant reward, self-interests, personal agendas all will add to the onerous challenges facing our new president. Americans must show resolve, courage, selflessness, and be willing to endure sacrifice to stay on course.

I fear that gloating Democrats may present more of an obstacle in the months ahead than bitter Republicans. Democratic leaders in both houses must subordinate their own interests and egos to the greater good of the country. They must make a good faith effort to follow the direction set for them by President-elect Obama.

It already appears that President-elect Obama and his team will maximize their transition period before entering the White House. But I urge them to hit the ground running with some easy wins when they take office. The Democratic majority in Congress should do all it can to expedite these initiatives and build positive momentum. Democrats have formed a new coalition around Obama, they should do their part to preserve it.

I remind President-elect Obama that the nation and the world will judge him by the appointments he makes to his cabinet and key White House positions. President Lincoln had his “Team of Rivals.” In that spirit, I hope that Obama selects the best qualified candidates from both parties to serve in his cabinet. This is a new America, free of the tired old way of politics, to paraphrase the President-elect.

And speaking of President Abraham Lincoln, it was only seven generations ago Lincoln was elected to maintain the Union and end slavery. Then, in the midst of the great Civil War, in 1864 he issued the Emancipation Proclamation. One hundred years later, in the 1960’s, Blacks and whites clashed over the rights of minorities. I saw the Reverend Martin Luther King speak, I saw “colored only” fountains and bathrooms, I witnessed the horror of segregation as it manifest itself in both the North and the South.

And now, in my lifetime, I have seen an African American do what was impossible only a few years ago. Only in America can such a story be possible.